Forex news from the European morning session - 1 April 2019
Headlines:
- SNB reiterates intervention pledge, adds that negative rates are essential
- Eurozone March preliminary CPI +1.4% vs +1.5% y/y expected
- UK March manufacturing PMI 55.1 vs 51.2 expected
- China says Liu He has left for Washington for trade talks
- Eurozone March final manufacturing PMI 47.5 vs 47.6 prelim
- Germany March final manufacturing PMI 44.1 vs 44.7 prelim
- France March final manufacturing PMI 49.7 vs 49.8 prelim
- Italy March manufacturing PMI 47.4 vs 47.5 expected
- Spain March manufacturing PMI 50.9 vs 49.7 expected
- ECB's Lautenschlaeger: Inflation is rising slower than expected
Markets:
- GBP leads, JPY lags on the day
- European equities higher; E-minis up 0.6%
- US 10-year yields up 3.7 bps to 2.442%
- Gold down 0.2% to $1,290.20
- WTI up 1.2% to $60.90
- Bitcoin up 1.0% to $4,115
Markets continued the risk-on mood from Asian trading but it was the pound that stole the spotlight in the European morning. The quid gained further ground after UK manufacturing PMI hit a 13-month high but owes much to do with stockpiling on Brexit uncertainty.
That continues to mask the underlying weakness in the UK manufacturing sector and will come back to bite the economy later on. But for now, that and Brexit sentiment (indicative votes later) is helping to give the currency a boost with cable steadily climbing from 1.3070 to the highs now above the 1.3100 handle.
The yen remains the weakest performer as bond yields and equities continue to rise on the back of more optimistic Chinese PMI figures. USD/JPY traded steadily around 110.95 to 111.10 for the most part.
The dollar itself was also weak with the risk-on mood dominating trading sentiment and that saw EUR/USD rise to 1.1250 before settling just under there now. AUD/USD and NZD/USD also posted modest gains but trading ranges remain relatively narrow for both pairs as they stick around near unchanged levels since the trading session in Asia.
Looking ahead, there's US retail sales data to help kick off North American trading before the focus turns back to Westminster where we'll see another round of indicative votes in the evening. Should there be no majority option, expect another meaningful vote later this week. And if there is one, expect a runoff vote between that and May's deal likely on Wednesday as UK lawmakers try and find a solution to break the Brexit deadlock.
